In many organizations, adjustments to inventory over certain perimeters require specific authorization. This is just good policy to project the priority over asset management and the need for accuracy in data. Management should be intimately involved when a process begins to deviate from designed process control points, especially when it involves the financial statements and balance sheet.

In some organizations, the cycle count analyst might have the authority to adjust inventory as much as $250 per item. Adjustments reaching $251 might require the stockroom manager to approve the transaction and, accordingly, very large adjustments may require the chief financial officer s authorization. With each level of authority in the organization, a new level of accuracy concern is raised. This type of process control also keeps those in management in the loop when they may not be due to workload and normal distractions. Where your organization determines to draw the lines of limitation is up to the management of your organization. An example is shown in Table 9-4.

Recently, in a class I taught in Minnesota, the attendees were especially attentive during the discussion about adjustment...